February 8, 2019 / 4:37 AM / 6 months ago

Rio Tinto's Energy Resources sees higher rehab costs on uranium project

(Reuters) - Energy Resources Australia, owned by mining giant Rio Tinto, on Friday flagged a higher-than-expected rehabilitation provision for its Ranger uranium project as costs from additional treatment and contingency plans rose.

The uranium miner said in a statement that the rehabilitation provision for its Northern Territory project was now estimated at A$830 million ($587 million) as of Dec. 31, compared with a previous estimate of A$808 million as at Dec. 6.

The Ranger project is controversial because of its proximity to the Aboriginal-occupied Kakadu National Park.

ERA has been selling stockpiled uranium from the Ranger since 2016 to fund closure of the mine, and it said in its statement that it would continue to sell uranium from existing stockpiles. (reut.rs/2Dl8NGl)

In December, ERA had raised its provision for the mine by about A$296 million to A$808 million, which was reflected in its 2018 net loss from continuing operations, which widened 10-fold to A$435.3 million.

ERA’s shares reversed course to trade about 7.3 percent lower after the Friday announcement. Mathan Somasundaram, an analyst with Blue Ocean Equities said that while ERA’s results were dismal, the stock had gained substantially this year.

“People are using the results to take some profit off the table, its not running because of the result per-se more so because the commodity has been having a pretty good run,” Somasundaram said.

ERA’s stock is still up about 30 percent this year.

Reporting by Ambar Warrick and Simran Lakhotia in Bengaluru; Editing by Subhranshu Sahu and Tom Hogue

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